ON OCT. 19, the Ministry of Economic Affairs' Investment Commission said the total amount of Taiwanese investments in China between January and September this year was US$6.85 billion.
This means that Taiwan was investing an average of NT$24.58 billion (US$761 million) per month in China during this period -- an increase of 28.8 percent compared with the same period last year. This does not include small and medium enterprise investments, individual investment in Chinese real estate or stock markets, or expenses for traveling, studying and other purposes.
To attract Taiwanese businesspeople away from China to return to investing in Taiwan, the Democratic Progressive Party (DPP) government has offered NT$200 billion in financing loans, preferential land rental and the "Big Investment, Big Warmth" project.
From May 2002 to May last year, a total of 48 Taiwanese companies had returned, and their investments were estimated at NT$26.29 billion, with an annual output value of NT$31.55 billion, creating 5,258 jobs. But if we divide that by 48 months, the monthly investment was only NT$448 million, or about 1.8 percent of the capital invested monthly in China.
Since the government is unwilling to "suit the remedy to the illness" and refuses to differentiate wage standards for local and foreign workers, Taiwanese businesspeople choose not to come back so as not to damage their international competitiveness.
Unfortunately, not only has DPP presidential candidate Frank Hsieh (
So can Chinese Nationalist Party (KMT) presidential candidate Ma Ying-jeou (
Will such policies have an immediate effect? He promises to increase the number of Chinese tourists from 1,000 per day to 10,000 per day within four years if elected.
Even if Taiwan's hotels and facilities are capable of accommodating them all, how profitable can it be?
According to travel agency statistics, the average daily expenditure of a Chinese tourist in Taiwan is about US$30. Thus, the monthly expenditure will be NT$300 million.
The Tourism Bureau hopes the figure will increase from US$30 to US$100 per day. But even so, monthly expenditure will only increase to NT$1 billion, still insignificant compared to the money Taiwan invests in China every month.
Foreign investors come to Taiwan just to make money. With Taiwan's constantly declining competitiveness, Taiwanese businesspeople can hardly return and make a profit, and foreign investors can hardly stay as massive domestic capital is remitted to investment in overseas securities.
All this reflects one fact: There is really not too much to invest in in Taiwan, as it is difficult to profit here. Then how can Hsieh and Ma be sure that Chinese companies will come and invest?
The opening of direct cross-strait links and the lifting of the investment ceiling on China-bound investment are certainly convenient to Taiwanese businesspeople, and helps them find greater business opportunities and international competitiveness.
Still, what good will it do Taiwan? Can it create more jobs here? Can it increase the government's tax revenues? Can it improve public order and prosperity? Can it narrow the income gap? And more importantly, can it increase the nation's international competitiveness?
The answer is a resounding "no."
These measures will have the opposite effect to their intent.
The above analysis tells us that Taiwan is bleeding heavily.
Whoever stops this bleeding by reducing investment in China, or whoever transfuses more blood to Taiwan by attracting greater foreign investment to balance Taiwanese investments in China can save Taiwan.
Today, both Hsieh and Ma are incapable of achieving these goals, yet they are our only choices.
Isn't it sad?
William Kao is chairman of the Victims of Investment in China Association.
Translated by Eddy Chang
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